Switzerland Plans to Make Fines and Bribes Non-Deductible

On November 16, the Swiss Federal Council informed that Switzerland plans to disallow companies to deduct financial sanctions with a penal character and bribes for tax purposes. The companies will however still be able to write off illegally gained profits seized by regulators.


Currently Swiss law does not regulate the tax treatment of fines, penalties and financial sanctions with a penal character. The incentive came from the Swiss Parliament that has asked the Federal Council to implement a new law that will explicitly regulate the tax treatment of such payments. The Swiss Federal Council has initiated public comment on the proposed bill that lasted until April 2016.

New Bill

The new law is to ensure that punitive financial sanctions and associated procedural costs are expressly non-deductible for tax purposes. The same will also apply for other expenses associated with offences that will ensure that the deductibility of bribes paid to individuals and the deductibility of expenses incurred in relation to criminal activities would not be possible. In contrast, non-punitive profit disgorgement sanctions are to remain deductible. The Luginbühl motion entitled "Tax deductibility of fines" (14.3450) will be implemented with the proposal.

The new bill will be voted on by the parliament.

Sources: Reuters, Swiss Federal Council - Public Comment

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